Rick Perry backs Glass-Steagall solution for Wall Street

Former Texas Governor Rick Perry is taking a position to Hillary Clinton’s left on financial reform, and pushing for a policy to break up big banks staunchly advocated by Sen. Elizabeth Warren (D-Mass.).

The GOP presidential candidate laid out his vision for Wall Street reform in a speech Wednesday. And among his policy proposals, Perry apparently advocated for the return of the Glass-Steagall Act, which established a firewall between traditional commercial banking and investment banking.

Perry’s stance would put him further to the left on that particular point than Clinton, and squarely in the camp of Warren and Sen. Bernie Sanders (I-Vt.).

In remarks delivered in New York, Perry did not mention Glass-Steagall by name, but floated among several policy proposals one that is practically identical.

“We could once again require banks to separate their traditional commercial lending and investment banking and related practices,” he said, according to prepared remarks.

Perry also floated an alternate idea of requiring large banks to hold additional capital as a cushion, but the idea of cleanly separating commerical and investment banking was a signature provision of Glass-Steagall.

Liberals like Warren have pushed for Glass-Steagall’s return for years, after it was repealed under President Clinton. Former Maryland Gov. Martin O’Malley, who is also running for president, argued that its return should be a central plank of any Democratic presidential platform.

Some GOP lawmakers have signed on to the effort, but Perry’s remarks make him the first in a crowded GOP field to float the idea.

And while he criticized her as newfound “proponent of Warrenism” due to her recent proposal to increase capital gains taxes, Perry’s particular position also puts him to the left of Hillary Clinton. The Democratic frontrunner has struck a cautious tone about the law, saying the matter of “too big to fail” is more complex than one single law.

Perry’s speech Thursday is among the most detailed remarks on Wall Street from a GOP candidate thus far, and he endeavored to thread a politically precarious needle.

He gave a nod to the lingering public discontent towards Wall Street and the wealthy, while arguing that Washington politicians and bureaucrats deserve a hefty share of the blame for the 2008 financial crisis.

And while he vowed to never bail out a bank if elected president, he blamed the nation’s housing policies before the crisis for sowing the seeds of the meltdown. He also criticized the Federal Reserve, saying it kept rates too low for too long before the crisis, encouraging the housing bubble.

But when it comes to regulating Wall Street, he argued that the Dodd-Frank financial reform law missed the mark.

“Dodd-Frank took aim at Wall Street and the bullet went right through them and hit Main Street,” he said.

While favoring stronger cushions for big banks, Perry argued that community banks, banks run as partnerships and asset management firms should be wholly exempted from Dodd-Frank’s new rules. He also said “orderly liquidation authority,” a new Dodd-Frank power that lets regulators step in and wind down a failing financial institution, should be scrapped and replaced with a new big bank bankruptcy process.

Perry also called on Congress to wind down housing giants Fannie Mae and Freddie Mac, but did not detail a process for doing so. There is bipartisan agreement that the current housing finance system, in which Fannie and Freddie guarantee the vast majority of new mortgages, is unsustainable, but coming up with a new system has been a significant challenge.

In the meantime, Perry said the two government-sponsored enterprises should be placed under stricter rules regarding the types of mortgages they can back, while encouraging private entities to adopt a bigger role in the marketplace.

He also pushed for changes to the Consumer Financial Protection Bureau long favored by Republicans, including bringing its budget under congressional control and reworking its leadership structure.